New to Real Estate Investing – $50k Budget
Architect · NJ · Member since 2026 · 7 posts · 19 votes
New to Real Estate Investing – $50k Budget
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Travis TimmonsPro Member
Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votesI am on team house hack or live-in flip in NJ over out of state investing in a cheap market. Those cheap houses are usually old and in areas that do not appreciate above the rate of inflation. They are typically cheap because they are not in locations that people with options want to live.
Out of state is harder than strangers on the internet make it seem. Also, $50k does not go as far as you think it will. You are probably looking at a realistic budget of $150-170k after taking into account 20% down, closing costs, make ready expenses, and cash reserves.
Cash flow with 20% down using long term rentals as a strategy does not exist if you are honest about your expenses. Anyone that tells you that it does probably has something to sell. Closing costs, repairs and maintenance to get it rent ready, vacancy, repairs and maintenance after renting, turnover costs (easily over $1000 per turnover) eat up your cash; you start in the hole and take several years to get it back assuming that there are no major expenses like a new roof or furnace.
With that said, buy the property you want to own the most 10 years from now. Leverage + rent and price appreciation is what gives real estate better returns than alternative investment options.
I've been investing in real estate for a while across a few different rental strategies. I have absolutely nothing to sell and would happy to help if you think that I can be a resource. Feel free to send me a direct message.
35 Replies
- Specialist · NJ · Member since 2022 · 1k+ posts · 653 votes6mo
I helped facilitate over 50+ out of state deals in the last 3+ years. Even if they look good on paper, the outcome can still be a loser. All the calculations assume the ARV is right, it assumes the rehab budget is right, it assumes the completed work is comp worthy. It assumes an active sales market.
All those markets in the rust belt are decent. From Pittsburgh through OH and into Indiana. By decent, I mean your money can stretch on the entry point if you use it right. I'll tell you right now, most if not all the houses you get from like a New Western or most wholesale outfits, they can't flip for profit. Price point to high, houses need too much work, and you never get top of the market on resale. There is no margin in them for a flip. Can you hold one, keep some if not all of you money in, and make a few hundred a month cashflow and then get out 5 - 7 years down the line? Yes, possibly.
What I learned from my 50+ deals is how you get in, matters. Sourcing from MLS or national wholesalers is not going to work. You have to learn how and where to buy in cash and then do the loan afterward if using hard money. You need to get your 90k house for 70k or 65k. It's out there, but they are cash deals, off market or alternative venues. Without in-house contracting and agents it's very, very hard. To an out of state contractor, you are money. You are an account they want. Your exit, not their problem. Believe me, 50k will shrink up so fast with one misstep.
It's not as easy as the podcasts make it seem, but not impossible either. Somewhere in between. But if someone said to me that a new investor with 50k is trying their first deal ever and it's an out of state deal, how do you think they'll do?
Not good.
- 6moAshish AcharyaBusiness MemberCPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
Janel, I saw someone mention being “team house hack” and I’m a big fan of that strategy too. It can be a great way to get started since you can use a primary residence loan (which is typically easier and requires less down than an investment loan), while also gaining hands-on experience managing a property. Over time, you can rebuild your savings, move into your next home, and turn the first property into a rental.
From a tax perspective, you can get deductions from depreciation, repairs, interest, and operating expenses, which can help offset rental income and improve overall cash flow. Where I see a lot of investors miss out is not understanding how real estate fits into their broader tax strategy. For example, a lot high-income W-2 earners get into real estate and invest in short-term rentals and materially participate, which can potentially allow them to offset other income. The other way to do this is through Real Estate Professional Status, but that is typically hard to qualify for. The key is understanding what your goals are and if you're after passive income or turning passive income into non-passive income for tax purposes.
I’d also recommend building a strong team early, a lender who can really guide you, a real estate agent in your target market, and eventually a CPA who understands real estate and can guide you through that passive vs. non-passive income concept. The support makes a huge difference as you get started.
INVESTOR FRIENDLY CPA®5240 Reviews - Member since 2025 · 20 posts · 2 votes1w
Hi Janel, saw you're getting started in real estate investing. I help investors underwrite deals and analyze numbers. Once you start looking at actual properties, I'd be glad to run the numbers with you. - Oliver
- Member since 2026 · 2 posts · 1 vote4d
Along with that 1st unit is rented at 2500, and the 3rd floor is currently undergoing another rental process for the 3rd unit (1/1) at 1700
- 3dJoseph ScoreseBusiness MemberBanker · Philadelphia · Member since 2009 · 2k+ posts · 634 votes
Hi Janel,
Welcome to BiggerPockets and congratulations on taking the first steps toward becoming a real estate investor!
First, having $50,000 available to invest puts you in a position to start exploring opportunities, provided you approach your first investment with the right strategy, financing, and realistic expectations.
As someone who works with real estate investors nationwide, my advice would be to focus on a few fundamentals before purchasing your first property.
1. Don't limit yourself to your local market.
Secaucus and much of North Jersey can be challenging from an affordability and cash-flow perspective. Consider researching markets in Pennsylvania, South Jersey, and other areas where acquisition prices may better align with your budget.2. Understand your financing options.
Traditional investment mortgages and DSCR (Debt Service Coverage Ratio) loans are worth exploring. DSCR financing focuses primarily on the property's rental income rather than your personal income, although credit, reserves, down payment, and other qualifications still matter.3. Don't invest your entire $50,000 in the purchase.
You'll want to account for your down payment, closing costs, repairs, vacancies, and cash reserves. Having money available after closing is just as important as getting into the property.4. Learn to analyze deals before making offers.
Understand rental income, property taxes, insurance, maintenance, financing costs, and potential cash flow. A property that looks affordable isn't necessarily a good investment.5. Build relationships with experienced investors.
Attend local real estate investor association meetings, connect with investor-friendly agents, and speak with lenders who understand investment properties. The right network can help you avoid expensive beginner mistakes.6. Consider your long-term strategy.
Are you looking for immediate monthly cash flow, long-term appreciation, or eventually building a portfolio? Your answer should influence where and what you purchase.One additional thought: Your first investment doesn't need to be a home run. It needs to be financially sound, manageable, and positioned to help you build toward your next opportunity.
I work with investors on DSCR rental financing, Fix-to-Rent/BRRRR strategies, and other investment property financing solutions. I'd be happy to share some educational resources and help you understand what financing options might be realistic with your available capital.
The goal isn't simply to buy your first rental property. It's to buy the right property, with the right financing, for the right reasons.
Best of luck on your investing journey!
Joseph V. Scorese
- 2dDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
A common issue, so Copy & Paste info below:
You’re ALWAYS better off investing locally, where it’s easier to:
· Learn the market
· Network to find deals
· Network to find contractors
· Be more hands-on
· Driveby property to keep tabs on it
· Network to find a decent Property Management Company (PMC)
Next best location is somewhere else you lived, where you have an existing network of family & friends to help you as accomplish the above list as needed.
If you invest OOS, your biggest challenge won't be finding properties to meet your goals on paper, it’ll be successfully building a knowledgeable & trustworthy local team.
The biggest mistake we see OOS investors making in our market, over and over again, is not fully understanding Neighborhood/Property/Tenant Classes and how they impact your probability of success!
They all run their ROI numbers assuming Class A results – when buying Class B, C & even D rentals.
Then they’re shocked when their performance expectations aren't met😞
If you choose to invest OOS, and have little to no landlord experience, we highly recommend targeting Class B Neighborhoods/Properties/Tenants. If you target Class C, you better be prepared emotionally & financially for plenty of challenges.
You can find Class B properties in the Midwest to BRRRR, but it will take more digging and YOU will need to understand how to analyze & identify them - because a lot of agents, wholesalers, PMCs, etc. will try to sell you Class C or D misrepresented as Class B:
· Many of them don't know/care what Class the properties are, so they're incompetent.
· Others know exactly what they are doing, so should be labeled as crooks!
EITHER WAY YOU LOSE!Why is Property Class so important for investors to understand and apply in their investing strategies?
Because the Property Class dictates the Class of the tenant pool that the property will attract.
The Tenant Class greatly impacts rental income stability and property maintenance/damage by tenants.
Both Property Class and Tenant Class will affect what type of contractors, handymen and property management companies you should target and be willing to deal with a property.
The Property Class will also impact the maintenance & renovations you do to, “Maintain to the Neighborhood/Market”.
Why is that important?
Well, if you buy & renovate a property in Class D area to Class A standards, what Tenant Class will actually rent it?
Or, if you put several Class D tenants in a Class A four-plex, what do you think will happen to the property?
What do you think will happen if you rehab a Class D rental to Class A standards?
So, if you fail to apply the correct assumptions to a property, your expectations won’t be met, and it may even be a financial disaster.
We use the following to rank Property Classes, in order of importance:
Property Tenant Pool: closely linked to location, but not always.
Property Location: closely linked to tenant pool, but not always.
Property Condition & Amenities: it’s important to, “Maintain to the Neighborhood/Market.”
Key metrics for each Property Class:
Class A Properties:
Tenant Pool: Majority of FICO scores 680+, no convictions/evictions in last 7 years.
Tenant Default: 0-5% probability of eviction or early lease termination.
Section 8: Class A rents are too high and won’t be approved.
Vacancies: 5-10%, depending on market conditions.
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.Class B Properties:
Tenant Pool: Majority of FICO scores 620-680, some blemishes, no convictions/evictions in last 5 years.
Tenant Default: 5-10% probability of eviction or early lease termination.
Vacancies: 10-15%, depending on market conditions.
Cashflow vs Appreciation: Typically, 1-3 years for positive cashflow, balanced amounts of relative rent & value appreciation.
Section 8: Class B rents are usually too high for the Section 8 program.Class C Properties:
Tenant Pool: Majority of FICO scores 560-620, many blemishes, but should have no convictions/evictions in last 3 years. Verifying recent 2-years of rental history very important! Same for 2-years of job/income stability.
Tenant Default: 10-20% probability of eviction or early lease termination.
Section 8: Class C rents usually meet program requirements, proper screening still recommended.
Vacancies: 10-20%, depending on market conditions and tenant screening.
Cashflow vs Appreciation: Should cashflow immediately, at the lower end of relative rent & value appreciation.
Class D Properties:
Tenant Pool: Majority of FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, but should have no convictions/evictions in last 12 months. Verifying last 2-years of rental history and income/employment extremely important to find the “best of the worst”.
Tenant Default: 20-30% probability of eviction or early lease termination.
Section 8: Class D rents meet program requirements, often challenges to pass Section 8 inspection.
Vacancies: 20%+, depending on market conditions and tenant screening.
Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciation.Where did we get our FICO credit score information from?
Check out this chart:
FICO Score
Pct of Population
Default Probability
800 or more
13.00%
1.00%
750-799
27.00%
1.00%
700-749
18.00%
4.40%
650-699
15.00%
8.90%
600-649
12.00%
15.80%
550-599
8.00%
22.50%
500-549
5.00%
28.40%
Less than 499
2.00%
41.00%
Make sure you understand the Class of properties you are looking at and the corresponding results to expect.
For example, Metro Detroit has 132 cities and the City of Detroit 183 Neighborhoods, which we’re analyzing and classifying to make better investing decisions.
Horror Stories from those that did NOT Understand What they were Buying:
https://www.biggerpockets.com/forums/48/topics/1137397-baltimore-a-path-to-never-ending-pain
https://www.biggerpockets.com/forums/432/topics/1231840-sell-at-a-loss-or-rent-at-a-loss
https://www.biggerpockets.com/forums/311/topics/840134-memphis-turnkey-tenant-turnover-costs
Logical Property Management4.9460 Reviews
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